HSBC Holdings Plc’s senior executives faced off with its large Hong Kong investor base, pledging to keep up dividend payments while they fended off calls from some local shareholders to split up the global lender.
At a meeting on the city’s Kowloon-side, Chairman Mark Tucker once again said he regrets cutting out dividend payments during the height of the pandemic, calling it a highly unusual event.
The bank has already moved to restore quarterly payouts and is planning a special $0.21 dividend after it completes the sale of its Canadian unit later this year.
HSBC has “substantial dividend distribution capacity,” Tucker told investors. The bank is set this year for the best returns in a decade, and while the recent banking turmoil has been unsettling there’s no systemic risk to the industry, he said.
About a 1,100 shareholders, including many elderly investors, braved gloomy weather to attend the meeting. Still, the event attracted a smaller crowd and appeared more orderly than last year, when some shareholders were frustrated after they were refused access to the event because of Covid
restrictions at the time.
Chief Executive Officer Noel Quinn as well as other executives such as Peter Wong, chairman of the Asian subsidiary, David Liao and Luanne Lim were also present at the meeting at the Kowloon Bay International Trade & Exhibition Centre.
The executives also reiterated their opposition to a push by its top shareholder Ping An Insurance Group Co. and a local activist shareholder to split off its Asian operations. The Chinese insurer has been waging a battle largely behind the scenes, asking HSBC to deepen costs cuts and be open to suggestions.
Tucker said restructuring the bank would create uncertainty and destroy value.
The executives are also contending with an effort by Ken Lui, leader of the “Spin Off HSBC Asia Concern Group,” who is calling for shareholders to vote in favor of a plan that requires the bank to provide regular updates on the restructuring of its Asian operations and to restore dividend payouts.
HSBC has included Lui’s two resolutions to be put up for a vote at its annual general meeting in Birmingham on May 5, but has urged shareholders to vote against it.
Tucker said he’s still strongly advising against the resolutions, arguing that it’s not prudent to fix a dividend.
Lui said ahead of Monday’s meeting that he was confident his resolutions would pass.
Ping An offered its support for the resolutions.
“After a preliminary study of some of the resolutions proposed by HSBC shareholders, we believe that these resolutions will have a positive impact on improving performance and enhancing shareholder value,” a Ping An Asset Management spokesperson said in an emailed statement. “We hope HSBC can remain open and value the suggestions from shareholders.”
Others in Hong Kong are keen on keeping the bank together.
“The two resolutions don’t make sense,” said Mr. Leung, who has owned HSBC shares since the 1980s when the price was around HK$5. “The split will only bring harm to the bank, administrative costs will soar.
Think of a family splitting into two. You will have two phone bills, two water bills. What’s the point?”
While rebuffing Ping An’s more radical revamp, the lender is steering billions of dollars in capital toward Asia and selling businesses in other parts of the world. In February, HSBC said it will consider a special payout after the sale of its Canadian unit. It will also resume paying quarterly dividends from the first quarter of this year.
Known colloquially in the city as The Hong Kong Bank, local shareholders make up about a third of the bank’s investor base. A broad part of the city have held onto the stock for years.
The former British colony is the beating heart of the bank’s global operations, accounting for about 28% of the group’s 2022 adjusted pretax profits.
Local investors took to the floor to criticize HSBC’s decision to buy the UK arm of Silicon Valley Bank earlier this year.
Tucker said buying the SVB unit was “too good an opportunity turn down.”
HSBC’s senior leadership gathered in Hong Kong in meetings last week and the lender sponsored the Rugby Sevens tournament in Hong Kong over the weekend.